Overview: Mineral extraction from mining to metal

Mineral extraction

The mining method is selected according to the size, shape, orientation and type of the iron ore body that is being mined. There are several mining methods available.

Surface mining

Surface mining is done when the deposits of commercially useful minerals are found near the surface. The overburden, or surface material covering deposit, is thin. Surface mining includes:

• open-pit mining – which is the recovery of materials from an open pit in the ground
• strip mining – which consists of stripping surface layers off to reveal ore beneath
• landfill mining – which involves sites where landfills are excavated and processed

Underground mining

Underground mining involves digging tunnels or shafts into the earth to reach the buried deposits. Underground mining includes:

• drift mining – which utilizes horizontal access tunnels
• slope mining – which uses diagonally sloping access shafts
• shaft mining – which utilizes vertical access shafts
• long wall mining – which is grinding a long ore surface underground
• room pillar mining – which is removing ore from rooms while leaving pillars in place to support the roof

Costs associated with different mining methods

Underground mining is generally more expensive than surface mining both in terms of capital investment and operating cost because companies have to drill more and use more expensive and complicated machines. Also, additional arrangements have to be made for the safety of mine workers.

More than 80% of the iron ore mining is surface mining. Companies like Rio Tinto (RIO), BHP Billiton (BHP), Vale (VALE), and Cliffs Natural Resources (CLF) are mostly involved in surface mining. These companies form close to 18% of iShares S&P Global Materials Sector Index Fund (MXI).
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Mine development and different stages

There are several steps involved in the development of a mine. The steps include:

• Exploration – involves defining the extent, location, and value of the ore body.
• Pre-feasibility study – used to determine if a deposit has reasonably robust economic benefit in order to justify the cost of the next stage of studies.
• Bankability or Feasibility study – at this stage a go or no-go decision is based. It includes reserves estimates, mine and plant designs, cost estimates, and  possible financing arrangements.
• Development – if based on economics, the company decides to go ahead with the project and it raises money to begin construction.
• Commissioning – under this stage, the equipment, facility, and plant are installed so that production can start.
• Production – at this stage, actual mining, milling, and processing of the ore starts.
• Reclamation – involves returning the land to its natural state after the economically available ore has been extracted.